When building marketplace software, it is crucial to provide online payments. Choosing a payment processor for your marketplace is key to remain competitive and boost consumer engagement, an organization should enable real-time or near real-time transactions.
For this purpose, software engineers can integrate a payment gateway. The main advantages of this solution are automated payment processing and increased data security. Since the team doesn’t have to develop tailor-made software, you will save both time and costs.
What is a payment gateway?
Serving as an analog of a third-party virtual terminal, a payment gateway is used for authorizing transactions. When a user makes an online purchase, the required card data is sent to a payment gateway, which forwards it to the acquiring bank and then to the organization that issued the card.
The key tasks of this process are to verify customer identity, authorize a transaction, and protect vendors against multiple issues that include fraud, insufficient funds, exceeded credit limits and expired cards.
With this functionality, consumers don’t have to provide their information to each individual merchant, which increases the security of sensitive data. In addition, popular payment gateways employ data encryption to prevent cybersecurity threats. Furthermore, by integrating an online payment solution , an organization faster develops an online marketplace platform, this way reducing project costs and time-to-market.
How does a payment gateway work?
The process of carrying out online transactions using a marketplace payment gateway:
1. When making an order or purchase, a user enters the necessary payment data, which is delivered to an app payment gateway. If this operation is performed via a website, the web browser used by the buyer encrypts data using Secure Socket Layer (SSL) connections to safeguard it from security risks.
2. This data is sent to the payment processor employed by the acquiring bank of a merchant and then to the card association (i.e., Mastercard, Visa, American Express).If you aim to develop a multi-vendor marketplace, it is reasonable to automate this process by allowing transaction data to bypass merchant systems.
As a consequence, the information will be routed directly from the browser to the gateway and finally — to the payment association sending the transaction to the card-issuing company.
3. After verifying the availability of funds, the card-issuing organization approves or declines the transaction, sending a response code to the payment processor. This code contains the reason for transaction failure, for example, credit card expiration or banking account termination.
4. If everything is okay, the authorization code is forwarded to the payment processor and next to the marketplace platform. As a result, the transaction is performed and the funds are withdrawn from the user’s account. Thanks to the app payment gateway, the entire process takes just 2–3 seconds.
If you are looking to launch an online marketplace or optimize your existing platform, look no further. PaidYET has the innovativeness and drive to find you the right payments solutions. This PCI-compliant solution allows you to collect credit card payments via a virtual payment terminal. As a result, you’ll quickly get paid online without using additional software or hardware or asking help from a developer.
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